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Gitano: Ready To Branch Out

Gitano is poised for a comeback.

The brand, which has had its share of financial problems in the past two years, finally has some financial stability after being purchased in March by Fruit of the Loom for $100 million in cash.

With that purchase, Gitano Group became a subsidiary of the Chicago-based FTL, with Jim Huntington as president, reporting to Fruit of the Loom’s chairman and chief executive officer William Farley.

The greater part of Gitano’s troubles came when Wal-Mart, which had been its largest account, dropped the denim-based sportswear brand after the company pleaded guilty to customs fraud.

Under its new management, Gitano has trimmed down — eliminating many of its fringe categories and putting more muscle into the men’s, women’s and children’s apparel areas.

“Gitano as a company was too unfocused,” said Farley recently in an interview from his Chicago headquarters. “Our view is, it should be denim-focused; while it is fashion-forward, it is a basic and fashion basic line, with denim-driven tops.”

But Gitano’s look was never a problem, Farley said; it was the company’s image within the mass retail community that needed to be tweaked.

“Gitano had a tremendous brand image built on upscale advertising and a responsiveness to fashion trends, as well as a good management team. Nevertheless, its internal business problems had plagued it to the point where the brand was thought of in the marketplace almost as Wal-Mart’s house brand.“What is critical, clearly, is to reestablish the Gitano brand in the mass channel, in addition to Wal-Mart. That means Kmart, Target, Caldor, Venture. We haven’t been in those stores for the past year and a half.”

When asked about the long-term financial goals for Gitano, Farley answered cautiously, “We have said that in our view this is a $500 million brand, and the time frame of five years sounds about right, plus or minus one. Wal-Mart is in excellent shape, and we are meeting with Kmart, Venture and Caldor. I do believe we’ll be back in the regionals in six months.”

Huntington, who was a consultant at Gitano before becoming president four months ago, said he worked the room at the recent International Mass Retailers Association convention, presenting new marketing plans and asking senior retail executives what they were looking for. Since then, he’s been traveling around the country for a second round of meetings.

“I had the goal before IMRA to meet with the chief executive officers of Bradlee’s, Hills, Meyers, and so forth, and trying to put the old Gitano behind us,” he said. “They’re interested in the brand, but not the baggage. My mission was to meet them and tell them where we are going, and ask them what their goals are.

“Gitano was always responsive to the market, but it wasn’t responsive to the bottom line. By limiting our scope, limiting our product, we can rebuild the relationships.”

Farley’s belief is that by presenting retailers with “a combination of product, price, merchandising and advertising,” the brand will rebuild its business.

“We want retailers to say: ‘If we don’t carry Gitano, we are at a disadvantage relative to the competition,”‘ he said.

When asked if Fruit itself, with its new emphasis on casual apparel, presents some competition, Farley pointed to Gitano’s fashion emphasis.

“While many people think of Gitano historically as an upscale brand, the reality was that it was bringing fashion at a good price point to the mass merchant, to middle America, and in that way it’s compatible with Fruit of the Loom,” he said.

And Huntington added, “In casualwear, we’ve already decided that we don’t want to cannibalize Fruit. If I’m selling the knit buyer at an account, she’s not coming to me to buy basic T-shirts and shorts. She’ll buy them from Fruit. She’s coming to me for something a little more forward.”Of course, it won’t hurt future business that FTL has historically had an excellent relationship with Wal-Mart. Or, as Farley noted, “I believe the relationship of Fruit of the Loom with Wal-Mart enhances the relationship of Gitano with Wal-Mart.”

In addition, FTL will manufacture some of the categories that Gitano previously had licensed, such as jersey T-shirts, fleece and shirts under its cost structure. The basic product will be designed by Gitano to add some fashion, Farley said, but it will still be produced so that retailers will have better margins.

The deal with FTL has already sprouted plans for some new categories, Farley said, including Gitano intimates, which will be introduced to the market “in the next six months.”

“In the second meeting, on our trip, we took store executives through a very specific business plan by division, by consumer segment, by category, that was tailored to their store,” said Huntington, leafing through a spiral-bound report with color inserts of suggested Gitano displays. “We call it a plan-o-gram.”

The notebook includes sketches of new trends by group, such as simply natural, or spice brights, along with a suggested merchandising guide. Huntington said that he wants accounts to come to him for suggestions.

“We will develop signage for the stores, we’ll send a merchandising guide to all the stores,” he said. “If an account buys, say, the spice brights or indigo blues group, then we will send a guide that is very product specific. We’ll design the national ads and the point-of-sales and work with the retailers. In fact, one of the things we’re working on now is a neat little hang tag that’s a wardrobe guide.”

And Gitano will continue with its high-profile, slightly high-brow advertising, Farley said.“Gitano has a history of being in somewhat more fashionable print — Glamour, Elle — and certainly a print campaign is one of the things we’ll be focusing in those same books,” he said. “As we get back into Kmart, Caldor, Venture, we will turn to some TV. Generally speaking, that would be network TV of the same format that Fruit uses — a lot of daytime.”

Farley added that the brand will stick with its agency, Mullen.

“They’ve done a good job with Gitano. They spend money wisely and are very creative.”Huntington spelled out a more specific media plan.

“Between now and the first half of 1995, we will create three billion consumer impressions,” he said. “You buy your media to your demographic, and you buy the most intrusive media in that demographic. So Mullen says, OK, the younger customer watches ‘Jeopardy,’ ‘Wheel of Fortune,’ ‘Sally Jessy Raphael’ and ‘Geraldo,’ and she reads Redbook, Elle, People and so forth. They can then determine that, based on your market, this will create x number of impressions.”

Huntington is optimistic about Gitano’s future, adding that the brand will definitely stay in New York.

“One of the best things that could have happened was for FTL to buy us,” he said. “Farley recognized two things about this company. One, this is a Seventh Avenue company. We feed off the influence of the fashion world. Two, when he came in, he expected to find a browbeaten mentality. Instead, he found a small group of people who wanted to save the company. I think other people would have stripped us for the parts.”